Greenspan Repeats Pending Social Security Crisis
Warning

August 27, 2004 (PLANSPONSOR.com) - Federal Reserve
Chairman Alan Greenspan again took aim at the pending Social
Security and Medicare crises, asserting that retirees will
face "abrupt and painful" choices if Congress does not act
swiftly.

“As a nation, we owe it to our retirees to promise only
the benefits that can be delivered,” Greenspan said in
opening remarks to a Jackson, Wyoming conference sponsored
by the Federal Reserve Bank of Kansas City on the
challenges posed by aging populations, the Associated Press
reported. “If we have promised more than our economy has
the ability to deliver, as I fear we may have, we must
recalibrate our public programs so that pending retirees
have time to adjust through other channels. If we delay,
the adjustments could be abrupt and painful.”

Greenspan said addressing the problem by raising payroll
taxes was problematic as this would make it harder for
employers to hire new workers. The 78-year old Fed chairman
has said that he favors raising the age at which full
Social Security benefits are delivered to retirees. (See
Greenspan: Cut Future Soc. Sec. Benefits
).

However, he said any solution must address all the
economic impacts that changes in the government’s two
biggest benefit programs would entail, such as the effect
on retirement decisions, the size of the labor force and
the saving behavior of all Americans, according to the
AP.

Greenspan has repeatedly spoken on the issue during this
election year, acknowledging its political sensitivity, but
saying it was one that must be dealt with. In his statement
before the Wyoming conference, he stated that this issue
was particularly poignant given the impending retirement of
77 million baby boomers.